Papers & Reports
Doron Narotzki, Tamir Shanan
In this Article, the authors examine the application of section 367 to section 351 exchanges and the income inclusion issues that may arise upon a contribution made by a US person to a foreign entity. Essentially, the Article focuses on the contribution of property by a US person to a foreign corporation that would not disqualify the transaction’s favorable tax treatment and would not trigger an immediate taxable event. The authors believe that allowing favorable tax treatment in cross-border transactions where a person contributes appreciated unrealized property may lead to tax revenue losses and such transactions should be re-examined under sections 351 and 367.
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Implementing Pillar Two: Potential Conflicts with Investment Treaties
This Article digests the OECD pillar two 15% minimum tax on the GloBE income of certain in-scope multinational enterprises. The authors believe that the pillar two rules will clash with the typical tax incentives offered by countries to attract foreign direct investments including tax holidays, lower tax rates, exemptions and accelerated depreciation regimes which are normally offered in tax treaties. Notwithstanding, the authors believe that the 15% minimum tax is a win-win solution for both investors and host states.
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Mandatory Binding Dispute Resolution in the Base Erosion and Profit Shifting (BEPS) Two Pillar Solution
This Article examines the role of binding taxpayer initiated international dispute resolution on the international tax system. The authors believe that international tax arbitration is less developed and less respectful of private interests than investor-state arbitration. It analyses the binding multilateral dispute settlement endorsed by the over 130 countries of the OECD inclusive framework pillar two solution as important because of the reconsideration by some states to their initial consent to the international adjudication of trade and investment disputes. The authors believe that the design of the international dispute settlement in the two-pillar solution and the focus on protection of multinationals from juridical double taxation display little appreciation of the experience with dispute resolution in international trade and investment.
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Challenges at the intersection between investment provisions in regional trade agreements and implementation of the GloBE Rules under Pillar Two
Loitti, Wamuyu and Owens seek to elucidate on how the GloBE Rules and their impact on investment incentives interact with investment provisions in Regional Trade Agreements. It also considers the impact of the minimum tax on regional integration efforts and the potential for a regional approach to its implementation.
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Intellectual Property and Tax Incentives: a Comparative Analysis of the EU and the US Legal Frameworks
This paper analyzes the use of intellectual property (IP) rights and the most common forms of tax measures to incentivize innovation and conducts a comparative analysis between the policies adopted by the US and the European Union. In discussing the interaction between tax policy and IP rights, it notes that tax policy instruments are used for purposes that differ from revenue-raising and wealth-redistribution, and a deep investigation becomes necessary to understand whether the objectives are pursued without hampering the status quo. Rizzo argues that the system should be looked at as a whole and several considerations should be conducted to understand whether there might be different ways to reach the same objectives more efficiently and without affecting the neutrality of the tax system; and that in all cases, the proposed policy should be coherent with its objectives and avoid undesired effects. The author proposes the use of tax systems to incentivize R&D tax credits and IP Box Regimes and analyses how these innovation-oriented tax measures will work.
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The Mirage of Mobile Capital
According to the author, capital mobility has preoccupied scholars of international taxation for more than 30 years and while capital is highly mobile, countries compete to attract investment, creating a race to the bottom, enabling multinational enterprises (MNEs) to shift profits, and recently culminating in the OECD’s proposed Global Minimum Tax, with the aim of substantially curtailing tax competition. This paper suggests, however, that the significance of mobile capital for international taxation may be largely an illusion.
Who Really Matters in Corporate Tax?
The authors used data from the IRS to analyse the significant contributions of the IRS, corporate executives, accountants, external accounting firms and individual tax preparers on corporate tax outcomes. The paper concludes that all these parties collectively shape corporate tax outcomes, but lack of data affects the understanding of the contributions of the various parties. However, from the limited data from IRS which the authors analyzed, they found that non-C suite executives and individual tax preparers play very important roles.
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Differing Abuse Concepts in Double Tax Conventions: At What Level and to What Extent Can Equality Be Realized?
Geringer’s paper seeks to explore treaty anti-abuse provisions specifically from an equality perspective. The significance of differing concepts for the assessment of tax avoidance and tax abuse in different double tax conventions has not yet been specifically evaluated through the lens of equality, and no previous studies have particularly focused on the question as to whether, to what extent, and on the basis of which concepts or principles, equal treatment for similar and possibly abusive situations ought (not) be realized at the treaty, EU or national levels. Geringer’s paper aims to rectify this, and questions the impact of unequal tax treatment in treaty application as a product of variances in anti-abuse provisions. It is based on a comparative analysis, and demonstrates that these effects are likely to specifically materialize in smaller economies and developing countries.
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A Global Climate Wealth Tax to Fund a Worldwide, Just Transition
Fetter in this paper examines the possibility of an internationally coordinated climate wealth tax, to fund a just transition globally. According to Fetter, a global climate wealth tax will provide the strongest protection against wealthy individuals leaving countries for tax purposes, creating wealth leakage; and could be used to curb wealth inequality directly correlated to higher greenhouse gas emissions. She argues that the global climate wealth tax would not replace the need for a carbon tax but would simply provide another incentive targeting high-net worth individuals, who bear a greater responsibility for greenhouse gas emissions.
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The Irish Apple Tax Disaster
Paul in this paper considers the argument that the European Commission apparently ignored the protocol it had granted to Ireland under which (in exchange for Ireland’s vote in favor of the Treaty of Lisbon), Ireland was not required to obtain EC approval when granting State Aid (to Apple or any other company). The EC’s insistence that Ireland collect an additional tax of €13 billion Euros in tax underpayments from Apple for the 2003 to 2014 period could be viewed as a breach of this protocol. Paul opines that the decision was justified given that the EC did not claim that Apple broke any specific Irish or EU laws but that its “sweet” deal with Ireland was illegal because the arrangement meant unfair competition and was therefore State Aid.
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